When I started in the appraisal business in 2002 my mentor told me "Real estate always goes up in value." I suppose a case could be made for that based on the Consumer Price Index or inflationary trends, but working as an appraiser through the Subprime Mortgage Crisis in Atlanta necessitated a more realistic view. That period was the first time I recall marking property values as "Decreasing" on an appraisal report, and it was the first time I recall making any sort of date of sale adjustment to comparable sales. Since then, I've analyzed price trends in the development of every appraisal report I've completed.

Which leads me to a recent Announcement from Fannie Mae which further clarifies their requirements around time adjustments in appraisals, effectively increasing their standards for supporting such adjustments or the lack thereof. Works for me. The tools I've used for years to accomplish this task should easily meet or exceed the recent increase in expectations.

But there is the matter of the following widely distributed graph which Fannie Mae released as further guidance on the subject:

Correct me if I'm wrong, but this graph appears to support making increasing date of sale adjustments, decreasing date of sale adjustments and no date of sale adjustments in the same report! That's a new one on me. Even with the safeguards surrounding appraiser independence which have been put in place in recent years (see last month's email again), I'm a little concerned that my days in this business will be numbered if I start using such practices. Or maybe the opposite is true! The methods I've developed over the years look at quarterly figures for an entire area (generally a high school or elementary school district), year over year figures on a quarterly basis for an entire area and the "1004MC" data which generally considers the sub-market of similar homes. (As a side note, I am considering whether the quarterly method should be updated to a monthly one.) I'll only make a positive or negative date of sale adjustment if there is a clear trend in either direction over the course of the previous 12 months. Makes sense to me. Hopefully it will continue to make sense to those reviewing my reports.


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